Tassal Group Limited (ASX: TGR) has announced some promising news for more growth, is it time to buy shares?
Tassal is a Tasmanian-based salmon farming company founded in 1986 and listed on the ASX in 2003. Its operations include hatching, farming, processing, sales and marketing of Atlantic salmon. It operates under four different brands of Tassal, Superior Gold, Tasmanian Smokehouse and De Cost Seafoods.
Tassal’s Next Growth Stage
The fish business announced that it has received all major approvals (environmental, aquaculture and development) from the Whitsunday regional Council and Queensland State Government for the Stage 3 expansion plans for its prawn farm located near Proserpine.
Tassal said its prawn growth strategy continues to be on track after receiving the approvals.
The Stage 3 expansion will mean adding 80 hectares of ponds and the new hatchery infrastructure to be ready for stocking the expanded farm in FY21.
The total production pond area in FY21 will be 350 hectares – that’s a lot of fish! Once the Stage 3 expansion is completed, Proserpine will have the largest prawn water treatment area in Australia with 85 hectares.
Tassal aims to generate $25 million of EBITDA (click here to learn what EBITDA means) from prawns by FY21, so this expansion will help achieve that. This investment will also create 50 jobs for the local community.
Tassal Managing Director and CEO Mark Ryan said: “We have now commenced the process to obtain approvals for Stage 4 expansion at Proserpine to add a further 70 hectares of additional ponds and new hatchery infrastructure, for production in FY22.
“Importantly, the re-development program for the existing prawn farm infrastructure of 270 hectares of ponds, including the deployment of smart technology and processing development, continues to be on track to achieve our FY20 forecast of 2,400 tonnes of production.”
Is Tassal A Buy?
The Tassal share price has gone up over 2% in early reaction to this news. According to CommSec, Tassal is valued at 13 times the estimated earnings for the 2020 financial year earnings. Plus, it has a solid fully franked dividend yield of 4.4%.
It could be an interesting idea, but I wouldn’t want to make it a large part of my portfolio.
I’d much rather buy the shares of the reliable businesses in the free report below for growth at a good price.
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